Dana sells unit that makes trailer axles for $31 million

WASHINGTON (Dow Jones/AP) -- Dana Corp. said it recently sold its trailer-axle-manufacturing business to Boler Co.'s Hendrickson USA LLC unit for $31 million.

The sale of the business comes as Toledo, Ohio-based Dana struggles to bring in enough cash to keep running during its Chapter 11 bankruptcy case.

However, Dana probably won't be getting as much from the sale as it originally expected. The purchase price represents a decline of 18.4 percent from the $38 million in cash the automobile-parts supplier had said Hendrickson would pay.

Under the deal, Hendrickson acquired Dana assets in Lugoff, S.C., and Barrie, Ontario. Dana's trailer-products business employed about 180 people in the United States and Canada. About half of those employees have been laid off.

Also, a Chinese affiliate of Hendrickson put aside $2 million in escrow to buy axle-making equipment and inventory from Dana's Chinese subsidiary Dana (Wuxi) Technology Co. Ltd. Dana said it expects the sale of its Wuxi assets to close in the first quarter.

Dana, operating under Chapter 11 protection since March, is asking the bankruptcy judge overseeing its case to allow the company to hold on to proceeds from the sale.

The company, which has also agreed to sell its engine hard-parts business to German supplier Mahle GmbH for $157 million, is hoping the assets sales will ease its cash crunch.

Dana sells brakes, axles and other parts to most major vehicle manufacturers. It's among a growing number of suppliers forced into major restructurings because of the slumping U.S. auto industry.

Since filing for Chapter 11 last March in the U.S. Bankruptcy Court in Manhattan, Dana has disclosed a plan to close eight U.S. plants and cut the work force at three others in North America. The company also said it intends to eliminate retiree health care benefits and alter labor contracts at its unionized plants. The moves are aimed at saving Dana $405 million to $540 million a year.

Dana has until Sept. 3 to submit a plan of reorganization to the bankruptcy court.